The 2016 All-Europe Research Team: Germany, No. 1: Andreas Neubauer & team

Deutsche Bank continues to dominate coverage of its home market’s equities, scoring a 20th consecutive top finish on this roster

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< The 2016 All-Europe Research Team

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Andreas Neubauer & team
Deutsche Bank
First-Place Appearances: 21

Total Appearances: 31

Team Debut: 1992

Deutsche Bank continues to dominate coverage of its home market’s equities, scoring a 20th consecutive top finish on this roster — and again far surpassing the longevity of every other top-ranked team this year. In his 15th year at the head of this group, Andreas Neubauer oversees 15 researchers in Frankfurt. Together they report on 165 German names, ten more than last year. Top picks for 2016 include Infineon Technologies, a Neubiberg-based provider of semiconductors to a variety of industries, in part on expectations that the robust performance in its automotives division will turbocharge gains companywide. Revenue in that segment rose 19.6 percent in the fiscal year through September, to €2.35 billion ($2.64 billion), accounting for 40.6 percent of Infineon’s total; while earnings climbed 15.8 percent, to €300 million. Moreover, he and his colleagues believe that the division is well positioned to support innovations by German automakers, projecting that demand for its electronics from developers of advanced driving-assistance systems, electric cars and hybrid models should propel steady growth for several years. At the same time, Infineon’s more-diversified businesses, such as chip card and security and industrial power control, should remain healthy as well, with a stronger dollar acting as a “significant tailwind,” says Neubauer, 51. In combination these factors are likely to enable the company to expand earnings by more than 20 percent over the next two years, while competitors deliver growth of “high single-digits to low teens,” he adds. Its shares — trading at €11.38 in mid-January, and below peers’ multiples of approximately 16 times earnings — earn a price objective of €14.60. Another name the Deutsche researchers are touting is CompuGroup Medical, Europe’s leading provider of health care software and information technology services. With a customer base of more than 400,000 professionals in 19 countries globally, the Koblenz-headquartered concern profits from cost pressures throughout health care systems, they advise. “We like CompuGroup’s relatively stable business model,” the team leader reports. “It benefits from 250,000 mostly self-renewing maintenance contracts with doctors, dentists and pharmacists.” In addition, the company enjoys strong pricing power thanks to “the regulatory need for doctors to maintain and update their respective IT systems,” he notes. At €38, his group’s target price for CompuGroup implies a 12.2 percent upside to its value in mid-January. Fund managers would do well to heed this guidance because Neubauer and his associates “have a good record of picking the right stocks at the right time,” attests one client, who also hails the crew for “providing excellent client service” along with “good local knowledge and the ability to reflect what managements are thinking, especially for the small and midsize German companies.”

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